The role of the prorenin receptor (PRR) in the regulation of ureteric bud (UB) branching morphogenesis is unknown. Here, we investigated whether PRR acts specifically in the UB to regulate UB branching, kidney development and function. We demonstrate that embryonic (E) day E13.5 mouse metanephroi, isolated intact E11.5 UBs and cultured UB cells express PRR mRNA. To study its role in UB development, we conditionally ablated PRR in the developing UB (PRR (UB-/-)) using Hoxb7 (Cre) mice. On E12.5, PRR (UB-/-) mice had decreased UB branching and increased UB cell apoptosis. These defects were associated with decreased expression of Ret, Wnt11, Etv4/Etv5, and reduced phosphorylation of Erk1/2 in the UB. On E18.5, mutants had marked kidney hypoplasia, widespread apoptosis of medullary collecting duct cells and decreased expression of Foxi1, AE1 and H(+)-ATPase α4 mRNA. Ultimately, they developed occasional small cysts in medullary collecting ducts and had decreased nephron number. To test the functional consequences of these alterations, we determined the ability of PRR (UB-/-) mice to acidify and concentrate the urine on postnatal (P) day P30. PRR (UB-/-) mice were polyuric, had lower urine osmolality and a higher urine pH following 48 hours of acidic loading with NH4Cl. Taken together, these data show that PRR present in the UB epithelia performs essential functions during UB branching morphogenesis and collecting duct development via control of Ret/Wnt11 pathway gene expression, UB cell survival, activation of Erk1/2, terminal differentiation and function of collecting duct cells needed for maintaining adequate water and acid-base homeostasis. We propose that mutations in PRR could possibly cause renal hypodysplasia and renal tubular acidosis in humans.